Appeal from the Circuit Court of Cook County. 90 L 1692. The Honorable Thomas E. Flanagan, Judge Presiding.
As Corrected March 20, 1996.
The Honorable Justice DiVITO delivered the opinion of the court: Hartman, P.j., and Scariano, J., concur.
The opinion of the court was delivered by: Divito
JUSTICE DiVITO delivered the opinion of the court:
In this appeal, we construe provisions of a lease agreement and an insurance contract to determine which of two policies of insurance provided coverage for damages related to the underlying cause of action. For reasons that follow, we affirm the judgment of the circuit court.
Plaintiff John Bieda filed a negligence action against the City of Chicago (the City) and Carson, International, Inc. (Carson), for injuries he suffered when part of an exhaust apparatus fell from a ceiling and struck him while he was making a delivery to Carson's Restaurant at O'Hare International Airport.
The City leased the premises where the restaurant was located to Carson through a lease which provided that Carson was to obtain insurance naming the City as an additional insured. Paragraph 19 of the lease stated:
"Lessee, at the expense of Lessee, shall keep in force during the term of this Lease, insurance * * * for the protection of Lessor against all liabilities, judgments, costs, damages, and expenses which may accrue against, be charged to, or recovered from Lessor, by reason of damage to the property of, injury to or death of any person or persons on account of any matter or thing which may occur on the demised premises, in a policy or policies in the amount of Five Hundred Thousand Dollars (500,000) with respect to any one person and One Million Dollars (1,000,000) with respect to any one accident or disaster."
On September 29, 1989, the day of the accident, Carson possessed a policy of insurance with Liberty Mutual Insurance Company (Liberty Mutual). Pursuant to the terms of the lease, the policy included liability insurance for the City as an additional insured. Its "Other Insurance" clause, which pertained to additional insured parties, stated:
"[O-2-]a. Where the applicable written agreement requires the insured to provide liability insurance on a primary, excess, contingent, or any other basis, this policy will apply solely on the basis required by such written agreement and Item 4. Other Insurance of SECTION IV of this policy will not apply, regardless of whether the person, organization, state or other political subdivision (for whom the insured had agreed in writing to provide such insurance) has available other valid and collectible insurance.
b. Where the applicable written agreement does not specify on what basis the liability insurance will apply, the provisions of Item 4. Other Insurance of SECTION IV of this policy will govern."
Under "Item 4. Other Insurance of SECTION IV," the policy provided that if other valid and collectible primary insurance was available to the insured, Liberty Mutual would share the loss through contribution by equal shares or by limits.
At the time of the accident, the City was the named insured on a policy issued by Transamerica Insurance Company (Transamerica). That policy provided coverage for bodily injury and property damage occurring at O'Hare International Airport.
After Bieda filed his negligence suit, the City filed a cross-claim against Carson for breach of contract and a third-party action against Liberty Mutual for determination of rights. Subsequently, Bieda's action was settled for $502,500, the City's cross-claim against Carson was dismissed, and the circuit court entered judgment for the City on its third-party action. The court found that paragraph 19 of the lease required Carson to provide primary insurance to the City and, therefore, paragraph O-2-a of the Liberty Mutual insurance ...